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Another massive Takata recall looms for large batch of car air bags, Companies & Markets News & Top Stories

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TOKYO (BLOOMBERG) – Global automakers may face another potentially huge air-bag recall as the US transport regulator evaluates the long-term safety of inflators made by bankrupt supplier Takata Corp.

The manufacturer, now owned by China’s Ningbo Joyson Electronic, faces a Dec 31 deadline to show the US National Highway Traffic Safety Administration (NHTSA) that as many as 100 million inflators containing a chemical drying agent will be safe long-term.

Those would be on top of the previous round of recalls, which started in 2008 and is linked to at least 23 deaths worldwide and more than 200 injuries in the US alone.

Takata had sold defective air bag inflators using ammonium nitrate, which were at risk of exploding violently in a crash and injuring passengers with metal shards. The Japanese parts maker pleaded guilty to a wire-fraud charge as part of a US$1 billion (S$1.35 billion) settlement with the US Justice Department over the air-bag problems, and later went out of business.

If the supplier can’t demonstrate the safety or durability of newer desiccant-equipped inflators, the US agency may order that they be recalled as well. The total bill for another massive recall could reach tens of billions of dollars, with carmakers bearing the brunt of the costs.

“NHTSA is carefully reviewing information regarding the safety of desiccated inflators to determine appropriate next steps,” the agency said. It typically takes the NHSTA as long as 6 to 12 months to issue an official recall after it collects enough data.

TK Services, the entity left with Takata’s operations, didn’t respond to requests for comment. Yoichiro Nomura, a representative of TKJP, the entity that absorbed Takata’s debts, declined to comment.

Under a 2015 consent order, Takata air bag inflators using ammonium nitrate, a widely-used chemical explosive, were progressively banned because the propellant tended to become unstable in humid climates. Years before, because of this risk, Takata added a chemical drying agent to its inflators and also used them to replace defective parts.

Takata initially sought to limit the initial batch of air-bag inflator recalls based on specific types and location, but as more injuries and deaths mounted, all units using ammonium nitrate were recalled, with the exception of those equipped with the drying agent while Takata and others in the auto industry studied their long-term safety.

“NHTSA reserves the right to order Takata to phase out of the manufacture and sale of the desiccated Takata PSAN inflators if NHTSA determines that such a phase out is required by the Safety Act,” the agency said in the consent order.

Given that a decade’s worth of desiccant-equipped inflators were made since 2008, the NHSTA may order a similar number of units to be recalled, according to Scott Upham of Valient Market Research, a provider of automotive safety analysis and research.

“The automakers and the suppliers, they all knew this was coming,” Upham said. “They are on the hook. Because of Takata’s bankruptcy, they are going to have to cover 100 per cent of the costs.”

Even as the possibility of another massive recall looms, it would be on top of a recent expansion of Takata air-bag recalls. On Dec 5, Takata told the NHTSA that another 1.4 million vehicles would have to be repaired.

Some automakers have already taken steps to recall desiccant-equipped air bags. In March, Honda Motor voluntarily recalled about 1.1 million vehicles in the US to replace inflators with the drying agent, which were installed in an earlier round of recalls. Honda said that the desiccant installed in Takata’s air bags may have absorbed excessive moisture when they were manufactured in Mexico, potentially making the problem worse.



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